Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A service delivery company has just received an order with the following financial data. All dollar values are given in constant dollars, and inflation will

image text in transcribed

image text in transcribed
"A service delivery company has just received an order with the following financial data. All dollar values are given in constant dollars, and inflation will impact the annual revenue, annual operating cost, and the salvage value. The two-year order requires immediately buying automated tracking systems for $90,000. The systems fall into the MACRS 5-year class. The systems will be salvaged for $12,000 at the end of two years. The project will bring in additional annual revenue of $129,000, but it is expected to incur an additional annual operating cost of $63,000. Management expects a general inflation rate of 3% per year during the project period. The company's tax rate is 21%, and its market interest rate is 19%. What is the net present worth of this project?" Table 9.6 MACRS Depreciation Schedules for Personal Properties with Half-Year Convention, Declining- Balance Method Class 3 5 7 10 15 21 200% 200% 200% 150% 150% Year Depreciation 200% n Rate 1 33.33 20.00 14.29 10.00 5.00 3.750 44.45 32.00 24.49 18.00 9.50 7.219 N 3 14.81* 19.20 17.49 14.40 8.55 6.677 4. 7.41 12.49 11.52 7.70 6.177 11.52* 5 11.52 9.22 6.93 5.713 8.93* 6 5.76 8.92 7.37 6.23 5.285 7 8.93 4.888 6.55* 5.90* 8 4.46 6.55 5.90 4.522 6.56 5.91

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Statistical Audit Automation The Principles Of Statistical Sampling Of Business Accounts

Authors: Nathan Poeschl

1st Edition

B0B17YP1SR, 979-8829041991

More Books

Students also viewed these Accounting questions